T-Mobile battles the subsidy beast (by raising prices)

T-Mobile plans to raise prices by $5 on two of its most popular mobile data bundles, but only on new customers who take a discount device from the carrier.

Its value bundles, which allow a customer to pay the unsubsidized price of a phone up front or in installments (also known as bring your own device), will remain the same price and are already substantially cheaper than “Classic” subsidized plans. The bottom line is that new customers who fall for the lure of a cheap smartphone could wind up paying as much as $20 more a month for a voice and data plan than a customer who opts to fork over the device’s true cost. Subsidized phones are truly never free. Operators just factor in the cost of the device into the contract. We wind up paying higher prices per megabyte and per voice minute because of it. The problem is once those contracts expire and operators have made back their customer acquisition costs, they don’t charge lower rates. T-Mobile is removing the shadowy accounting veil from those policies, showing – quite aggressively – that a good deal of the cost of our rate plans is really just a mortgage payment against our phones. Do the math yourself: $20 times 24 months equals $480 in savings over the life of a contract. Meanwhile you can buy T-Mobile’s newest smartphone, the Nokia Lumia 710, for an unsubsidized price of $350. Suddenly that ‘free’ subsidy doesn’t seem like such a great deal anymore.